Results for the Year Ended 31 December 2017
30 April 2018
Pembridge Resources Plc
("Pembridge" or "the Company")
Results for the Year Ended 31 December 2017
Pembridge Resources plc (LSE: PERE) ("Pembridge" or the "Company"), the mining focussed Special Purpose Acquisition Company listed on the main market for listed securities of the London Stock Exchange plc ("LSE"), is pleased to announce its results for the year ended 31 December 2017.
Highlights:
· Change of name to Pembridge Resources Plc;
· David Linsley, formerly the Executive Director of Behre Dolbear, appointed as Chief Executive Officer;
· Francis McAllister, formerly Chairman, CEO and a Director at Stillwater Mining Company, appointed as Non-Executive Director and Chairman;
· Gati Al-Jebouri, Managing Director at LUKOIL Mid East Ltd and Guy Le Bel, former Quadra and Capstone Mining executive, appointed as Non-Executive Directors;
· Seamless transition from AIM to a Standard Listing on the London Stock Exchange; and
· Successful £2.5 million equity raising
Post Year End
· Completion of Sale and Purchase Agreement with Capstone Mining Corp to acquire the Minto copper mine in Yukon Canada.
· New additions to the management team - Chief Financial Officer, Paul Fenby and Thomas Horton, Vice President Project Development.
Frank McAllister, Chairman of Pembridge Resources, commented:
"During 2017, Pembridge underwent a number of important changes. New management saw the Company successfully transition into a Special Purpose Acquisition Company listed on the main market of the London Stock Exchange.
"Since the start of the year, Pembridge announced its first acquisition, agreeing to buy the Minto Mine in Canada.
"This marks a transformational opportunity for Pembridge and fulfils the Company's goals of acquiring a producing and profitable mining operation. The Minto Mine will be the Company's primary asset and we look forward to working with the Selkirk First Nation, Yukon Government and the significant established workforce."
A copy of the annual report and accounts will be posted to shareholders 4 May 2018 and will be available on the Company's website - www.pembridgeresources.com
For further information please contact:
Pembridge Resources PLC
David Linsley, Chief Executive Officer
Paul Fenby, Chief Financial Officer
T: +44 (0)207 917 2968
Joint Brokers
GMP Securities L.P. - Canada
Michael Barman
T: +1 416 367 8600
Arden Partners - United Kingdom
Fraser Marshall
T: +44 20 7614 5900
SI Capital Limited
Nick Emerson
T: +44 (0)1483 413 500
Financial Public Relations
Tavistock Communications
Jos Simson / Charles Vivian / Gareth Tredway
T: +44 (0)207 920 3150
About Pembridge Resources plc
Pembridge Resources is a mining focussed SPAC listed on the main market for listed securities of the London Stock Exchange plc. The Company's management is composed of a team of senior leaders with experience in various board and executive positions with a complementary mix of expertise in geology, engineering, project appraisal, and commercial development across a wide range of commodity groups and mining jurisdictions.
The Company recently announced that it had signed a Share Purchase Agreement with Capstone Mining Corp to acquire a 100% interest in the Minto copper mine in Canada's Yukon territory through the purchase of Capstone Mining Corp's 100% interest in Minto Explorations Ltd.
Strategic Report
Chairman's and Chief Executive's statement
We are pleased to present the report and Financial Statements of Pembridge Resources Plc's ("Pembridge" or "the Company") results for the year ended 31 December 2017.
Introduction
The past 12 months saw the old China Africa Resources plc convert from an AIM rule 8 cash shell into a main board listed Special Purpose Acquisition Company ("SPAC") seeking to invest in the base and precious metals sectors.
Given the macro outlook for mining and mining investment, the Directors believed an opportunity existed for the Company to take advantage of cyclically low asset and project valuations, particularly in base and precious metals which were, and still, offer significant opportunities to invest in orphaned projects where existing management teams have been restricted of capital.
In order to help achieve the goals a strong team was assembled by the new CEO with experience in various board and executive positions in the mining area spanning several decades, with a complementary mix of expertise in geology, engineering, project appraisal, and commercial development.
Successful execution of this strategy would offer exposure to the next forecast ''up cycle'' and compete with other capital pools including private equity.
Additionally, given the unique strategy being pursued by Pembridge it was felt that an LSE standard listing would be more in line with our strategic objectives and ultimately more advantageous to the Company and our shareholders.
Our transition from AIM to a standard listing on the London Stock Exchange was delivered seamlessly and on time by our legal advisors putting us in a position to fully exploit our stated aims to build a portfolio of compelling investments with our uniquely qualified team.
We are also pleased to report that, post year end, we were able to announce our first transaction under this strategy, signing a Sale and Purchase Agreement with Capstone Mining Corp. ("Capstone") to acquire the Minto copper-gold-silver mine "Minto".
Minto is located in the mining friendly Yukon territory in Canada and has a 10-year production history with all key infrastructure, facilities and operating teams in place.
The asset was sourced from within our board, and historic relationships meant we could agree on the acquisition without any tender process.
Minto fits perfectly with the Company's stated goal to acquire a producing and profitable mining operation to which our team can add further value. This acquisition will represent a core asset to Pembridge and will be used as a platform for future growth.
As we move towards deal close and becoming a producing mining Company, we have once again made an effort to attract the right personnel to achieve all our targets going forward.
In January we welcomed Thomas Horton as Vice President Project Development. Thomas is a mining professional with a range of work experience across Canada, Middle East, Europe and the UK. He joined Pembridge from Private Equity firm Duke Street Capital, where he was involved in deal execution and origination, following the completion of his Masters in Business Administration (MBA).
Within the past month, we announced the appointment of Paul Fenby as Chief Financial Officer. Paul has over 25 years' experience in natural resources, most recently as Group CFO at Asia Resource Minerals Plc, a UK listed, Indonesia focussed coal mining Company, with responsibility for both the London and Jakarta listed entities.
Financials
During the year the Company made a loss of US$1.92 million (2016 - loss of US$3.8 million). The closing cash and cash equivalents balance is US$2.027 million compared to US$1.163 million in 2016 due to proceeds from the placing and subscription in August 2017.
Principal risks and Uncertainties
|
Nature of Risk |
How we manage it |
|
Funding Risk The Company will need to secure additional funding to complete its acquisition of the Minto mine and cover working capital.
Impact Shortage of cash for acquisition costs. |
The Company has the capability to raise funds required to complete the transaction via its brokers, GMP Securities, Arden Partners and SI Capital. |
|
Regulatory Risk The Company will not be able to reverse or acquire a project into the Company before the deadline or raise sufficient capital to become a SPAC.
Impact The Company will cease to be traded on the Main Board of the London Stock Exchange. |
Pembridge is currently undertaking a process to raise sufficient funds to complete the Minto Mine Acquisition.
This process is being facilitated by the assembled team outlined in the Chairman's and Chief Executive's Statement who have engaged with the necessary advisors, including brokers to raise capital within the required timeframe. |
|
Human Resources Risk The achievement of the Company's objectives will be dependent on the Company attracting and retaining qualified and motivated staff.
Impact The efficiency of a particular aspect of the Company's operations could be affected leading to reduced profitability. |
The Company has attracted and will retain a qualified team by providing a competitive remuneration policy, which includes financial performance incentives so as to align the team with the shareholders of the Company. |
|
Investment Risk The investments the Company makes fail to be of any value.
Impact The investments are written off. |
Pembridge has a comprehensive investment policy and strategy, as outlined in its Financial Prospects Policy ("FPP") procedures, that will assist in prudent measures being made to identify and perform due diligence on the investments that the Company makes. |
Business Review & Development
A review of the business and its operations can be found in the Chairman's and Chief Executive's statement on page 2.
Key Performance indicators
|
KPI |
Measure |
Performance |
|
Shareholder returns |
Share price performance |
The Company's share price dropped from 2.45p to 1.45p in a year that was generally punishing for the mining sector. |
|
Cash flows |
Cash balances |
Cash balances increased from US$1.163m to US$2.027m. |
Francis McAllister
Non-Executive Director and Chairman of the Board
27 April 2018
Corporate and Social Responsibility Report (CSR)
Pembridge is committed to complying with all Health and Safety, environmental and social legislation and protecting the health and general wellbeing of its employees. It is committed to preserving the environment.
Environment
Concern for the environment is of upmost importance to Pembridge. It is our policy to reduce to a minimum the potential environmental impact of our activities and have a positive impact on the areas in which we operate.
Health, Safety and Security
The health, safety and security of the personnel and communities in which we operate takes priority in the management of our operations. Our goal is to prevent injury and ill health to employees and contractors by providing a safe and healthy working environment and by minimising risks associated with occupational hazards.
Business Ethics
Pembridge is committed to carrying out all its operations with high moral and legal standards. Pembridge has an anti-corruption and anti-bribery policy which are in line with the requirements of the UK Bribery Act. Staff and contractors are made aware of their obligations both on recruitment and by periodical updates.
The Strategic Report (comprising the Chairman's and Chief Executive's statement and principal risks and uncertainties) on pages 2-3 was approved by the Board of Directors and was signed on its behalf by Francis McAllister, Chairman of the Board.
Francis McAllister
Non-Executive Director and Chairman of the Board
27 April 2018
Directors' Report
The Directors present their report and the audited Financial Statements of the Company for the year ended 31 December 2017.
General information about the Company is provided in note 1 to the Financial Statements.
Principal activity
The principal activity of Pembridge is to operate as a base and precious metals focussed holding Company. The Company name was changed from China Africa Resources Plc on 7 April 2017.
Business review and future development
A review of the business and future developments of the Company is included within the Chairman's and Chief Executive's statement on pages 2 and 3, which form part of the Strategic Report. The Board has announced that it has commenced a fundraising roadshow with the intention of raising funds from new and existing shareholders to enable the purchase of the Minto mine from Capstone. The proposed acquisition constitutes a reverse takeover for the purposes of the Listing Rules of the FCA.
Results and dividends
During the year the Company made a loss of US$1.9 million (2016 - loss of US$3.8 million). The loss incurred during the year consists of costs of running the head office in London, associated listing and regulatory requirements, legal and professional costs in connection with the move from AIM onto the Standard Segment, together with investment acquisition related costs. No dividends were paid during the year and the Directors do not recommend payment of a final dividend (2016: $nil).
Going concern
The Company's ability to continue to adopt the going concern basis of preparation will depend upon a number of matters including future successful capital raisings for necessary funding or loans from third parties.
The Company has sufficient funds to meet its working capital needs over the going concern period, however a significant fundraise will be required in order to complete the acquisition of the Minto mine and associated working capital requirements. Completion of the acquisition at the date of these Financial Statements is, in addition to raising the necessary funds, subject to shareholder and regulatory approvals. In the event that the Company is unable to secure finance either through third parties or capital raising, it may not be able to complete the acquisition. Excluding the impact of completing the acquisition in the future, the Company has sufficient funds in order to meet its contracted and committed liabilities for at least 12 months from the date of approval of the Financial Statements. If the proposed fundraise and acquisition are delayed, the Company will introduce cost reductions or undertake a small fundraise to meet working capital commitments.
Post reporting date events
Since the end of the year the Company has entered into a definitive Sale and Purchase agreement with Capstone to acquire the Minto copper mine in the Yukon territory, Canada.
Directors
The Directors who served during the year ended 31 December 2017 and up to the date of signing the Financial Statements were as follows:
Francis McAllister Chairman and Director (appointed 18 August 2017)
David Charles Linsley Chief Executive Officer and Director (appointed 17 February 2017)
Guy Le Bel Non-Executive Director (appointed 18 August 2017)
Gati Al-Jebouri Non-Executive Director (appointed 27 September 2017)
Roderick Webster (resigned 27 September 2017)
John Bryant (resigned 27 September 2017)
Paul Johnson (resigned 17 February 2017)
Nicholas John O'Reilly (resigned 17 February 2017)
Directors' indemnities
Pembridge maintained liability insurance for its Directors and officers during the period and also as at the date of the Directors' Report.
Financial instruments
The financial risk management policies and objectives are set out in detail in Notes 20 and 22 of the Financial Statements.
Information on exposure to risks
Principal risks and uncertainties are discussed in the Strategic Report on page 3, while liquidity risks are covered in Note 20.
Greenhouse gas emissions
The Company has as yet minimal greenhouse gas emissions to report from the operations of the Company and does not have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors report) Regulations 2014.
Statement as to disclosure of information to auditor
The Directors who were in office on the date of approval of these Financial Statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditors are unaware. Each of the Directors have confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.
Auditor
The auditors, PKF Littlejohn LLP, have expressed their willingness to continue in office and a resolution that they be re-appointed will be proposed at the annual general meeting.
By order of the Board
David Linsley
Director and Chief Executive Officer
27 April 2018
Directors' Remuneration Report
For the year ended 31 December 2017 salaries and fees, bonuses and share based payments were the sole components of remuneration. The Board will consider the components of Directors' remuneration during the year and following this review these are likely to consist of:
Set out below are the emoluments of the Directors for the year ended 31 December 2017:
|
|
|
|
|
Share based |
|
|
|
2017 |
Fees |
|
Bonus |
payments |
|
Total |
|
|
US$'000 |
|
US$'000 |
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
Roderick Webster* |
22 |
|
- |
- |
|
22 |
|
Paul Johnson** |
- |
|
- |
- |
|
- |
|
John Bryant* |
11 |
|
- |
- |
|
11 |
|
Nicholas O'Reilly** |
- |
|
- |
- |
|
- |
|
Francis McAllister |
- |
|
- |
- |
|
- |
|
David Charles Linsley |
75 |
|
160 |
64 |
|
299 |
|
Gati Al-Jebouri |
- |
|
- |
- |
|
- |
|
Guy Le Bel |
- |
|
- |
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
108 |
|
160 |
64 |
|
332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*resigned 27 September 2017 **resigned 17 February 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based |
|
|
|
2016 |
Fees |
|
payments |
|
Total |
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
Roderick Webster |
- |
|
15 |
|
15 |
|
Francis Lewis |
21 |
|
8 |
|
29 |
|
James Richards |
21 |
|
- |
|
21 |
|
Paul Johnson |
- |
|
15 |
|
15 |
|
John Bryant |
- |
|
15 |
|
15 |
|
Nicholas O'Reilly |
- |
|
15 |
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
42 |
|
68 |
|
110 |
|
|
|
|
|
|
|
Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under Company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the Financial Statements; and
· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.
Independent Auditor's Report to the Members of Pembridge Resources Plc
Opinion
We have audited the Financial Statements of the Company for the year ended 31 December 2017 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Cash Flow Statement and notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
In our opinion, the Financial Statements:
· give a true and fair view of the state of the Company's affairs as at 31 December 2017 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the European Union; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
· the Directors' use of the going concern basis of accounting in the preparation of the Financial Statements is not appropriate; or
· the Directors have not disclosed in the Financial Statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the Financial Statements are authorised for issue.
Our application of materiality
The materiality applied to the Financial Statements was US$70,000, based on thresholds for net assets and the loss before tax. The performance materiality was US$49,000.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial Statements. In particular, we looked at areas involving significant accounting estimates and judgement by the Directors and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
We have determined that there are no key audit matters to communicate in our report.
Other information
The other information comprises the information included in the Annual Report, other than the Financial Statements and our auditor's report thereon. The Directors are responsible for the other information. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the Financial Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Directors' report for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements; and
· the Strategic Report and the Directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
· the Financial Statements and the part of the Directors' remuneration report to be audited are not in agreement with the accounting records and returns; or
· certain disclosures of Directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Board of Directors on 10 February 2017 to audit the Financial Statements for the year ended 31 December 2016. Our total uninterrupted period of engagement is two years, covering the years ended 31 December 2016 to 31 December 2017.
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit.
As part of our audit procedures, we gained an understanding of the legal and regulatory framework applicable to the Company and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations or through collusion. Our tests included making enquiries of management, as well as inspecting underlying supporting documentation and calculations.
As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud. Procedures designed and executed to address these risks included the review and testing of journal entries during the period, testing and evaluating management's key accounting estimates for reasonableness and consistency, review of transactions through the bank statements, and undertaking cut-off procedures to verify proper cut-off of expenses.
Our audit opinion is consistent with the additional report to the Board.
David Thompson
(Senior statutory auditor)
For and on behalf of PKF Littlejohn LLP 1 Westferry Circus
Statutory auditor Canary Wharf
London E14 4HD
27 April 2018
Statement of comprehensive income
For the year ended 31 December 2017
|
|
|
|
Year |
|
Year |
|
|
|
|
ended |
|
ended |
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
Note |
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative, legal and professional expenses |
|
|
(1,768) |
|
(744) |
|
Impairment of investment in and amounts due from subsidiary undertaking |
13 |
|
- |
|
(3,263) |
|
Loss on disposal of investments |
14 |
|
(157) |
|
- |
|
Other income |
6 |
|
- |
|
192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
7 |
|
(1,925) |
|
(3,815) |
|
|
|
|
|
|
|
|
Finance income |
|
|
- |
|
- |
|
Finance cost |
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax |
|
|
(1,925) |
|
(3,815) |
|
|
|
|
|
|
|
|
Income tax |
10 |
|
- |
|
- |
|
|
|
|
|
|
|
|
Loss for the year attributable to the equity holders of the Company |
|
|
(1,925) |
|
(3,815) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
- |
|
- |
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
(1,925) |
|
(3,815) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Year |
|
|
|
|
ended |
|
ended |
|
Earnings per share expressed in US cents |
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
|
|
|
|
Basic and diluted loss per share attributable to the equity holders of the Company |
11 |
|
(1.4c) |
|
(14.9c) |
All amounts relate to continuing activities.
The notes on pages 27 to 39 form part of these Financial Statements.
Statement of financial position
As at 31 December 2017
Company number: 07352056
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
Note |
|
US$'000 |
|
US$'000 |
|
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
12 |
|
2 |
|
3 |
|
Investment in subsidiary |
13 |
|
- |
|
- |
|
Available-for-sale financial assets |
14 |
|
- |
|
- |
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
2 |
|
3 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Trade and other receivables |
15 |
|
354 |
|
38 |
|
Cash and cash equivalents |
16 |
|
2,027 |
|
1,163 |
|
|
|
|
|
|
|
|
|
|
|
2,381 |
|
1,201 |
|
|
|
|
|
|
|
|
Total assets |
|
|
2,383 |
|
1,204 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
17 |
|
(213) |
|
(184) |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
(213) |
|
(184) |
|
|
|
|
|
|
|
|
Net assets |
|
|
2,170 |
|
1,020 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
18 |
|
1,306 |
|
1,048 |
|
Share premium |
18 |
|
2,902 |
|
138 |
|
Merger relief reserve |
|
|
- |
|
- |
|
Other reserve |
|
|
165 |
|
112 |
|
Retained deficit |
|
|
(2,203) |
|
(278) |
|
|
|
|
|
|
|
|
Equity attributable to shareholders of the Company |
|
|
2,170 |
|
1,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Financial Statements were approved and authorised for issue by the Board on 27 April 2018 and signed on behalf of the Board by:
David Linsley Francis McAllister
Director and Chief Executive Officer Non-Executive Director and Chairman
The notes on pages 27 to 39 form part of these Financial Statements.
Statement of changes in equity
For the year ended 31 December 2017
|
|
|
Share capital |
Share premium |
Merger relief reserve |
Other reserve |
Retained deficit |
Total |
|
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2016 |
|
377 |
6,556 |
4,052 |
- |
(7,024) |
3,961 |
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
- |
- |
- |
- |
(3,815) |
(3,815) |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income for the year |
|
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
- |
- |
- |
- |
(3,815) |
(3,815) |
|
|
|
|
|
|
|
|
|
|
Cancellation of share premium via Court Order |
|
- |
(6,556) |
- |
- |
6,556 |
- |
|
|
|
|
|
|
|
|
|
|
Proceeds from shares issued |
|
586 |
216 |
457 |
- |
- |
1,259 |
|
|
|
|
|
|
|
|
|
|
Direct cost of shares issued |
|
- |
(80) |
- |
- |
- |
(80) |
|
|
|
|
|
|
|
|
|
|
Value of placing warrants |
|
- |
(97) |
- |
97 |
- |
- |
|
|
|
|
|
|
|
|
|
|
Value of share options |
|
- |
- |
- |
15 |
- |
15 |
|
|
|
|
|
|
|
|
|
|
Share based payments |
|
85 |
99 |
- |
- |
- |
184 |
|
|
|
|
|
|
|
|
|
|
Realisation of merger reserve on distribution of subsidiary undertaking |
|
- |
- |
(4,509) |
- |
4,509 |
- |
|
|
|
|
|
|
|
|
|
|
Distribution of subsidiary via dividend in specie |
|
- |
- |
- |
- |
(504) |
(504) |
|
|
|
|
|
|
|
|
|
|
Total transactions with owners recognised directly in equity |
|
671 |
(6,418) |
(4,052) |
112 |
10,561 |
874 |
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2016 |
|
1,048 |
138 |
- |
112 |
(278) |
1,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2017 |
|
1,048 |
138 |
- |
112 |
(278) |
1,020 |
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
- |
- |
- |
- |
(1,925) |
(1,925) |
|
Other comprehensive income for the year |
|
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
- |
- |
- |
- |
(1,925) |
(1,925) |
|
|
|
|
|
|
|
|
|
|
Proceeds from shares issued |
|
182 |
2,772 |
- |
- |
- |
2,954 |
|
|
|
|
|
|
|
|
|
|
Direct cost of shares issued |
|
- |
(153) |
- |
- |
- |
(153) |
|
|
|
|
|
|
|
|
|
|
Share based payments |
|
76 |
151 |
- |
- |
- |
227 |
|
|
|
|
|
|
|
|
|
|
Value of placing warrants |
|
- |
(6) |
- |
6 |
- |
- |
|
|
|
|
|
|
|
|
|
|
Value of share options |
|
- |
- |
- |
47 |
- |
47 |
|
|
|
|
|
|
|
|
|
|
Total transactions with owners recognised directly in equity |
|
258
|
2,764
|
-
|
53
|
-
|
3,075
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2017 |
|
1,306 |
2,902 |
- |
165 |
(2,203) |
2,170 |
The following describes the nature and purpose of each reserve within owners' equity:
|
Reserve |
Description and purpose |
|
Share capital |
Nominal value of shares issued. |
|
Share premium |
Amount subscribed for share capital in excess of nominal value, less share issue costs. |
|
Merger relief reserve |
Reserve created on issue of shares on acquisition of its subsidiary in accordance with Companies Act 2006 provisions. |
|
Other reserve |
Cumulative fair value of warrants and share options granted. |
|
Retained deficit |
Cumulative net gains and losses recognised in the statement of comprehensive income. |
The notes on pages 27 to 39 form part of these Financial Statements.
Cash flow statement
For the year ended 31 December 2017
|
|
|
|
Year |
|
Year |
|
|
|
|
ended |
|
ended |
|
|
Notes |
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
US$'000 |
|
US$'000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Loss for the year |
|
|
(1,925) |
|
(3,815) |
|
Adjusted for: |
|
|
|
|
|
|
Depreciation |
|
|
1 |
|
- |
|
Share option charge |
|
|
47 |
|
15 |
|
Share based payments |
|
|
- |
|
184 |
|
Impairment of investment in subsidiary |
|
|
- |
|
3,063 |
|
Loss on disposal of investments |
|
|
157 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
(1,720) |
|
(553) |
|
Movements in working capital |
|
|
|
|
|
|
Increase in trade and other receivables |
15 |
|
(316) |
|
(21) |
|
Increase in trade and other payables |
17 |
|
29 |
|
116 |
|
Net cash used in operating activities |
|
|
(2,007) |
|
(458) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
- |
|
(3) |
|
Purchases of available-for-sale financial assets |
|
|
(199) |
|
- |
|
Proceeds from sale of available-for-sale financial assets |
|
|
269 |
|
- |
|
|
|
|
|
|
|
|
Net cash generated from investing activities |
|
|
70 |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Repayment of borrowings |
|
|
- |
|
(200) |
|
Proceeds from issuance of shares |
|
|
2,954 |
|
1,259 |
|
Direct cost of share issue |
|
|
(153) |
|
(80) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from financing activities |
|
|
2,801 |
|
979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
864 |
|
518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
1,163 |
|
645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
16 |
|
2,027 |
|
1,163 |
|
|
|
|
|
|
|
The notes on pages 27 to 39 form part of these Financial Statements.
Notes to the Financial Statements
For the year ended 31 December 2017
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
The principal activity of the Company is to operate as a mining focussed holding Company.
Pembridge Resources Plc is incorporated and domiciled in England. The address of the Company's registered office is Suite A, 6 Honduras Street, London EC1Y 0TH. Pembridge Resources Plc's shares are listed on the Standard Segment of the Official List of the London Stock Exchange.
The Company's Financial Statements are presented in United States dollars (US$), which is also the functional currency of the Company, and rounded to the nearest thousand.
These Financial Statements were approved for issue by the Board of Directors on 27 April 2018.
2. STANDARDS AND INTERPRETATIONS NOT YET APPLIED BY THE COMPANY
2.1 New and amended standards adopted by the Company
There were no IFRSs or IFRIC interpretations relevant to the Company that were effective for the first time for the financial year beginning 1 January 2017 that had a material impact on the Company.
2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company
At the date of authorisation of these Financial Statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company.
Management anticipates that all of the pronouncements will be adopted in the Company's accounting policy for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Company's Financial Statements.
· IFRS 2 - Amendments to classification and measurement of Share Based Payments (effective 1 January 2018)
· IFRS 9 - Financial Instruments (effective 1 January 2018)
· IFRS 15 - Revenue from Contracts with Customers (effective 1 January 2018)
· IFRS 15 - Revenue from Contracts with Customers (Clarifications) (effective 1 January 2018)
· IFRS 16 - Leases (effective 1 January 2019)
· Annual Improvements - Annual Improvements to IFRSs 2014 - 2016 Cycle (effective 1 January 2018)
· IFRIC 22 - Foreign Currency Transactions and Advance Consideration (effective 1 January 2018)
· IFRIC 23 - Uncertainty over Income Tax Treatments (1 January 2019*)
· Annual Improvements - Annual Improvements to IFRSs 2015 - 2017 Cycle (1 January 2019*)
*Subject to EU endorsement
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and IFRIC interpretations (IFRS IC) as adopted by the European Union, and with the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have been prepared under the historical cost convention.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Going concern
The Company meets its working capital and investment requirements from its cash and cash equivalents. The Company raises finance for its activities in discrete tranches. The Company did not generate revenues from operations during 2017. As such, the Company's ability to continue to adopt the going concern assumptions will depend upon a number of matters including future successful capital raisings for necessary funding or loans from third parties.
Proceeds from the issue of shares during the year amounted to $2.954m and cash and cash equivalents at 31 December 2017 amounted to $2.027m. The Company has sufficient funds to meet its working capital needs, whilst further funding will be required either through equity raisings or other financial arrangements to fund the acquisition of the Minto Mine. This cannot be guaranteed and there are no legally binding agreements in place at the date of approval of these Financial Statements relating to the raising of additional funds. Completion of the acquisition is also subject to the normal shareholder and regulatory approvals.
Excluding the effect of raising the requisite funds to enable completion of the Minto Mine acquisition, the Company should be able to meet its contracted and committed expenditure for at least the next 12 months from existing cash and cash equivalents. If the proposed fundraise and acquisition are delayed, the Company will introduce cost reductions or undertake a small fundraise to meet working capital requirements. The Company's Directors have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing these Financial Statements.
Property, plant and equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation and any provision for impairment. Depreciation is provided using the straight-line method to write off the cost of the asset less any residual value over its useful economic life as follows:
Furniture and office equipment - 3 years
Foreign currency translation
In preparing the Financial Statements, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising, if any, are recognised in profit or loss.
Taxes
Income tax represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable result for the period. Taxable profit or loss differs from reported profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments, assets and liabilities
The Company uses financial instruments comprising cash and cash equivalents, trade and other receivables and trade and other payables that arise from its operations.
Financial assets
The only financial assets currently held by the Company are classified as loans and receivables and cash and cash equivalents. These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.
Loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position.
During the year the Company acquired and disposed of available-for-sale financial assets. These assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period.
Derecognition of financial assets
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the asset and substantially all the risk and rewards of ownership of the asset to another entity.
Financial liabilities
Trade payables and other short-term monetary liabilities are all classified as other financial liabilities. At present, the Company does not have any liabilities classified as fair value through profit or loss.
Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. All interest and other borrowing costs incurred in connection with the above are expensed as incurred and reported as part of financing costs in the statement of comprehensive income.
Derecognition of Financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand and deposits held at call with banks. Any interest earned is accrued monthly and classified as finance income. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
Investment in subsidiary
The Company recognises its previous investments in subsidiaries at cost, less any provision for impairment. The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the acquisition. It also includes share based payments issued to employees of the Company for services provided to subsidiaries.
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction from proceeds.
Merger Relief
The difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange has been credited to a merger relief reserve account, in accordance with the merger relief provisions of the Companies Act 2006 and accordingly no share premium for such transactions has been recognised. Following the write down in investment for impairment and distribution of the subsidiary undertaking via a dividend in specie, the reserve became realised and consequently transferred into retained earnings.
Share based payments
The fair value of services received from employees and third parties in exchange for the grant of share options and warrants is recognised as an expense, except for those granted in connection with the issue of new ordinary shares which are shown as a deduction in equity. A corresponding increase is recognised in other reserves in equity. The fair value of the share options and warrants is calculated using an appropriate valuation model. At each reporting period end the Company revises its estimate of the number of options that are expected to become exercisable. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium when exercised.
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company's accounting policies, described in Note 3, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Critical estimates in applying the Company's accounting policies
The following are the critical estimates that the Directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in Financial Statements.
Share based payments
Estimating fair value for share based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant of share options and warrants. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life, volatility and dividend yield and making assumptions about them. The assumptions used for estimating fair value for share based payment transactions are disclosed in Note 19.
5. OPERATING SEGMENTS
Operating segments are reported in a manner consistent with the internal reporting provided to the Board, who are responsible for allocating resources and assessing performance of the operating segment.
The Company currently has one operating segment, being a holding Company, therefore all IFRS 8 disclosures are incorporated within other notes to the Financial Statements.
6. OTHER INCOME
|
|
|
Year ended 31 December 2017 |
|
Year ended 31 December 2016 |
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
Management charge to former subsidiary undertaking |
|
- |
|
192 |
|
|
|
|
|
|
7. EXPENSES BY NATURE
|
|
Year ended |
|
Year ended |
|
This is stated after charging: |
31 December 2017 |
|
31 December 2016 |
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
Staff costs |
366 |
|
44 |
|
Share options granted to Directors |
19 |
|
15 |
|
Share based payments |
9 |
|
184 |
|
Auditor's remuneration (note 8) |
38 |
|
13 |
|
Management fee |
- |
|
126 |
|
|
|
|
|
8. AUDITOR'S REMUNERATION
|
|
|
|
|
Year ended |
|
Year ended |
|
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
Remuneration receivable by the Company's auditors for the audit of the Financial Statements |
14 |
|
13 |
|||
|
|
||||||
|
|
|
|
|
|
|
|
|
Fees payable to the Company's auditor and its associates |
|
24 |
|
- |
||
|
for other services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total remuneration |
|
|
38 |
|
13 |
|
|
|
|
|
|
|
|
|
9. EMPLOYEES AND KEY MANAGEMENT
The total Directors' emoluments for the year, including share based payments, were US$351,000 (2016 - US$110,000) and social security payments were US$Nil (2016 - US$2,000). Detailed disclosure of Directors' remuneration is disclosed in the Directors' remuneration report on page 14.
The average number of employees was 2 (2016 - 2).
Key management personnel as defined under IAS 24 have been identified as only the Board of Directors.
10. INCOME TAX
|
|
|
Year ended |
|
Year ended |
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
Current tax: |
|
|
|
|
|
UK corporation tax on the result for the year |
|
- |
|
- |
|
|
|
|
|
|
|
Total current taxation |
|
- |
|
- |
|
Deferred taxation |
|
- |
|
- |
|
|
|
|
|
|
|
Income tax |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Differences explained below: |
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
(1,925) |
|
(3,815) |
|
|
|
|
|
|
|
Loss before tax multiplied by the standard rate 19.25% (2016: 20%) |
(371) |
(763) |
||
|
|
|
|
|
|
|
Effect of: |
|
|
|
|
|
Expenses not deductible for tax |
|
102 |
|
665 |
|
Tax losses for which no deferred income tax asset was recognised |
|
269 |
|
98 |
|
|
|
|
|
|
|
Tax for the year |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognised deferred tax asset |
|
|
|
|
|
Tax losses UK - excess management expenses |
|
526 |
|
299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
526 |
|
299 |
|
|
|
|
|
|
The deferred tax assets are currently unrecognised as the likelihood of sufficient future taxable profits does not yet meet the definition of "probable".
The unrecognised deferred tax asset has no expiry period.
11. EARNINGS PER SHARE
The calculation of basic and diluted loss per ordinary share is based on the following data:
|
|
|
Year ended |
|
Year ended |
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share (US cents) |
|
(1.4c) |
|
(14.9c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares for basic and diluted loss per share |
|
133,409,358 |
|
25,671,810 |
|
|
|
|
|
|
|
|
|
|
|
|
The basic and diluted loss per share have been calculated using the loss attributable to shareholders of the Company of US$1,925,000 (2016: US$3,815,000) as the numerator, i.e. no adjustment to loss was necessary. The basic and dilutive loss per share are the same as the effect of the exercise of share options and warrants would be anti-dilutive.
Details of share options and warrants that could potentially dilute earnings per share in future periods are set out in Note 19.
12. PROPERTY PLANT AND EQUIPMENT
|
|
Furniture and office equipment |
|
|
US$'000 |
|
|
|
|
|
|
|
Cost |
|
|
At 1 January 2017 |
3 |
|
Additions |
- |
|
|
|
|
|
|
|
At 31 December 2017 |
3 |
|
|
|
|
|
|
|
Depreciation |
|
|
At 1 January 2017 |
- |
|
Charge for the year |
(1) |
|
|
|
|
|
|
|
At 31 December 2017 |
(1) |
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December 2017 |
2 |
|
|
|
|
|
|
|
Net book value at 31 December 2016 |
3 |
|
|
|
|
|
|
13. INVESTMENT IN SUBSIDARY
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
US$'000 |
|
US$'000 |
|
China Africa Resources Namibia (pty) Ltd |
|
|
|
|
|
Opening balance |
|
- |
|
3,567 |
|
Impairment |
|
- |
|
(3,063) |
|
|
|
|
|
|
|
Distribution to ordinary shareholders via dividend in specie |
|
- |
|
(504) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
|
|
|
|
China Africa Resources Namibia (pty) Ltd was 100% owned by the Company and incorporated in the Republic of Namibia. The principal activity of China Africa Resources Namibia (pty) Ltd was exploration and evaluation of mining assets in Namibia. The Company was acquired on 11 August 2011 by the issue of 6,326,923 ordinary 1p shares at a price of 40p, being the market price on the date of acquisition. The acquisition price was converted to US dollars at an exchange rate of 1.642, being the exchange rate at the date of the transaction. The principal reason for this acquisition was to develop the Berg Aukas Mine project in Namibia.
On 14 December 2016 the Company disposed of its sole interest, the Berg Aukus Mine project, held through its wholly owned subsidiary, China Africa Resources Namibia (pty) Ltd, through the completion of an in specie distribution. The special dividend was independently valued at 1.75 pence per share and totalled £403,846 (equivalent to US$504,000).
14. AVAILABLE-FOR-SALE FINANCIAL ASSETS
|
|
|
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 January |
|
|
|
|
|
- |
|
- |
|
Additions |
|
|
|
|
|
426 |
|
- |
|
Disposals |
|
|
|
|
|
(426) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
|
|
|
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
15. TRADE AND OTHER RECEIVABLES
|
|
|
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
Other receivable |
|
|
|
|
|
118 |
|
26 |
|
Prepayments |
|
|
|
|
|
41 |
|
10 |
|
VAT recoverable |
|
|
|
|
|
195 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
354 |
|
38 |
|
|
|
|
|
|
|
|
|
|
16. CASH AND CASH EQUIVALENTS
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
Cash and short-term deposits |
|
|
2,027 |
|
1,163 |
|
|
|
|
|
|
|
17. TRADE AND OTHER PAYABLES
|
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
97 |
|
162 |
|
Other payables and accruals |
|
|
|
116 |
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
213 |
|
184 |
|
|
|
|
|
|
|
|
Trade and other payables are non-interest bearing and normally settled in the month following date of invoice.
18. SHARE CAPITAL AND PREMIUM
|
Allotted, called up and fully paid |
Number of ordinary shares |
Number of deferred shares |
Share Capital - ordinary shares |
Share Capital - deferred shares |
Share premium |
Total |
|
|
|
|
US$000 |
US$000 |
US$000 |
US$000 |
|
At 1 January 2017 |
75,839,596 |
- |
1,048 |
- |
138 |
1,186 |
|
Shares issued as consideration for acquisition of investments |
6,003,599 |
- |
76 |
- |
151 |
227 |
|
Proceeds from share issue at 1.6p per share |
142,006,062 |
- |
182 |
- |
2,772 |
2,954 |
|
Cost of share issue |
- |
- |
- |
- |
(153) |
(153) |
|
Value of placing warrants |
- |
- |
- |
- |
(6) |
(6) |
|
Share split (see below) |
- |
81,843,195 |
(1,011) |
1,011 |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
223,849,257 |
81,843,195 |
295 |
1,011 |
2,902 |
4,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On 18 August 2017 the Company passed a special resolution to sub-divide 81,843,195 ordinary shares of £0.01 each into one new ordinary share of 0.1p each and one deferred share of 0.9p each.
Ordinary shares have attached to them full voting, dividend and capital distribution rights (including on a winding up). Deferred shares are not entitled to vote and do not confer a right to receive a dividend. The deferred shares are entitled to participate on a winding up once the ordinary shares have received £1,000,000 per ordinary share.
19. SHARE BASED PAYMENTS
As part of the fundraise on 20 August 2017, whereby 142,006,062 ordinary shares were issued for cash, each new ordinary share issued had a warrant attached to acquire an additional ordinary share at an exercise price of 3.02 pence with an exercise life of two years. The fair value of the placing warrants, amounting to $5,531, has been deducted from the share premium arising from the fundraise on the basis they were issued for services relating to the placing.
In addition, the Company issued a total of 22,050,000 share options, in accordance with the rules of the Company's Share Option Plan 2016 as approved by shareholders on 18 August 2017.
The awards were approved by the Board on 30 October 2017 (the "Award Date").
All of the options awarded are for ten years and each award will vest 33.3% on the first, second and third anniversary of the Award Date. The exercise price for each award is set at 2 pence per share in respect of the one third vesting on the first anniversary of the Award Date; 4 pence per share in respect of the one third vesting on the second anniversary of the Award Date; and 8 pence per share in respect of the one third vesting on the third anniversary of the Award Date. The fair value of these options was determined using the Black-Scholes valuation model at £0.0038 per option. The significant inputs into the model were a share price of £0.0145 at the grant date, volatility of 29%, a dividend yield of £Nil and an annual risk-free interest rate of 0.5%. Volatility was based upon the standard deviation of movement in daily share prices over the three months prior to date of grant.
Share options issued to the Directors were as follows:
David Linsley 7,200,000
Guy Le Bel 1,350,000
Francis McAllister 1,350,000
Gati Al-Jebouri 1,350,000
The balance of 10,800,000 options were awarded to consultants and members of the management team.
The fair value of the options, amounting to $38,158, has been included within administrative expenses within the statement of comprehensive income.
Two consultants each received a 1,500,000 share options (3,000,000 options in total) during 2017. The options have an exercise price of 4.34 pence per share with a three-year exercise life. The options vested immediately upon grant. The fair value of these options was determined using the Black-Scholes valuation model at £0.00233 per option. The significant inputs into the model were a share price of £0.02625 at the grant date, volatility of 27%, a dividend yield of £Nil and an annual risk-free interest rate of 0.5%. Volatility was based upon the standard deviation of movement in daily share prices over the six months prior to date of grant.
The fair value of the options, amounting to $8,733, has been included within administrative expenses within the statement of comprehensive income.
Movements in the number of share options and warrants and their related weighted average exercise prices are as follows:
|
|
|
2017 |
2016 |
||
|
|
|
Options and warrants |
Average exercise price |
Options and warrants |
Average exercise price |
|
|
|
Number |
(pence) |
Number |
(pence) |
|
At 1 January |
|
53,082,948 |
4.34 |
- |
- |
|
Granted |
|
167,056,062 |
3.26 |
53,082,948 |
4.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
|
220,139,010 |
3.52 |
53,082,948 |
4.34 |
|
|
|
|
|
|
|
Out of the 220,139,010 (2016: 53,082,948) outstanding options and warrants, 198,089,010 (2016: 53,082,948) were exercisable at the year-end. No options or warrants were exercised or forfeited during the year.
Share options and warrants outstanding at the end of year have the following expiry date and exercise prices:
|
Grant-Vest |
|
Expiry date |
Exercise price |
2017 |
|
2016 |
|
|
|
Number |
(pence) |
Number |
|
Number |
|
|
|
|
|
|
|
|
|
2016 |
|
2018 |
4.34 |
47,082,948 |
|
47,082,948 |
|
2016 |
|
2019 |
4.34 |
6,000,000 |
|
6,000,000 |
|
2017 |
|
2019 |
3.02 |
142,006,062 |
|
- |
|
2017 |
|
2020 |
4.34 |
3,000,000 |
|
- |
|
2017-2018 |
|
2027 |
2.00 |
7,350,000 |
|
- |
|
2017-2019 |
|
2027 |
4.00 |
7,350,000 |
|
- |
|
2017-2020 |
|
2027 |
8.00 |
7,350,000 |
|
- |
|
|
|
|
|
|
|
|
In addition, 6,003,599 new ordinary shares were issued during the year as consideration for the acquisition of available for sale assets. The fair value of the shares was $227,000.
20. FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument, are disclosed in note 3.
The only financial assets currently held by the Company are classified as loans and receivables and cash and cash equivalents.
Categories of financial instruments
The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities.
|
|
|
|
Carrying value |
||
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
US$'000 |
|
US$'000 |
|
Financial assets |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Loans and receivables |
|
|
|
|
|
|
Trade and other receivables |
|
|
354 |
|
26 |
|
Cash and cash equivalents |
|
|
2,027 |
|
1,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,381 |
|
1,189 |
|
Financial liabilities |
|
|
|
|
|
|
Current- amortised cost |
|
|
|
|
|
|
Trade and other payables |
|
|
(213) |
|
(184) |
|
Borrowings |
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(213) |
|
(184) |
As at 31 December 2017, trade and other receivables are all considered to be recoverable.
All financial liabilities are repayable within one year.
The fair value is equivalent to book value for current assets and liabilities.
The main risks arising from the Company's financial instruments are liquidity risk, interest rate risk and foreign currency risk. The Directors review and agree policies for managing these risks and these are summarised below.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. The Directors are current assessing the Company's options in respect of raising additional finance for the business.
The Directors monitor cash flow on a daily basis and at quarterly Board meetings in the context of their expectations for the business, in order to ensure sufficient liquidity is available to meet foreseeable needs.
Interest rate risk
The interest rate profile of the Company's cash and cash equivalents as at 31 December was as follows:
|
|
|
|
US |
|
Pound |
|
|
|
As at 31 December 2017 |
|
Dollars |
|
Sterling |
|
Total |
|
|
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
|
|
Cash at bank with no interest rate |
|
38 |
|
1,989 |
|
2,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38 |
|
1,989 |
|
2,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
|
Pound |
|
|
|
As at 31 December 2016 |
|
Dollars |
|
Sterling |
|
Total |
|
|
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
|
|
Cash at bank with no interest rate |
|
1 |
|
1,162 |
|
1,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
1,162 |
|
1,163 |
|
|
|
|
|
|
|
|
|
The Company's cash at bank is held with an institution with an A+ credit rating (Fitch).
Foreign currency risk management
The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
|
|
|
|
31 December 2017 |
|
31 December 2016 |
|
|
|
|
US$'000 |
|
US$'000 |
|
Cash and cash equivalents |
|
|
|
|
|
|
Pound Sterling |
|
|
1,989 |
|
1,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,989 |
|
1,162 |
|
|
|
|
|
|
|
The following table details the Company's sensitivity to a 10% increase and decrease in the US dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally and represents Management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and equity where the US dollar strengthens 10% against the relevant currency. For a 10% weakening of the US dollar against the relevant currency, there would be an equal and opposite impact on the profit and equity, and the balances below would be negative.
|
|
|
British pound currency impact |
|
|
British pound currency impact |
|
|
|
|
|
|
|
|
|
|
31 December 2017 |
|
|
31 December 2016 |
|
|
|
US$'000 |
|
|
US$'000 |
|
|
|
|
|
|
|
|
Effect on loss |
+10% |
199 |
|
|
116 |
|
|
|
|
|
|
|
|
|
-10% |
199 |
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on equity |
+10% |
199 |
|
|
116 |
|
|
|
|
|
|
|
|
|
-10% |
199 |
|
|
116 |
|
|
|
|
|
|
|
21. RELATED PARTY TRANSACTIONS
|
|
31 December 2017 |
|
31 December 2016 |
|
|
US$'000 |
|
US$'000 |
|
The Company had the following transactions with |
|
|
|
|
Weatherly International Plc, a Company in which Roderick Webster and John Bryant are non executive Directors |
|
|
|
|
|
|
|
|
|
Management Fee paid |
- |
|
126 |
|
|
|
|
|
|
The Company had the following transactions with |
|
|
|
|
HK ECE a shareholder of the Company. |
|
|
|
|
|
|
|
|
|
Loans repaid during the year |
- |
|
(200) |
|
Loans outstanding at the end of the year |
- |
|
- |
|
|
|
|
|
|
The Company had the following transactions with Value Generation Limited, a Company controlled by Paul Johnson |
|
|
|
|
|
|
|
|
|
Consultancy services paid |
- |
|
96 |
22. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Company considers its capital to comprise its ordinary share capital, share premium and accumulated retained losses as well as loans and reserves (consisting of share based payments reserve and merger relief reserve).
The Company's objective when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders.
The Company meets its capital needs by equity financing.
Capital for the reporting period under review is summarised as follows:
|
|
31 December 2017 |
|
31 December 2016 |
|
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
Total equity |
2,170 |
|
1,020 |
|
|
|
|
|
23. EVENTS SUBSEQUENT TO THE REPORTING DATE
The Company signed a Share Purchase Agreement dated 14 February 2018 with Capstone Mining Corp. to acquire 100% of Minto Exploration Ltd, which operates the Minto Mine. The consideration for the proposed acquisition is comprised of US$37.5 million in cash plus new ordinary shares such that, subsequent to completion, Capstone Mining Corp. will own 9.9% of the Company. The Minto Mine is an open pit and underground copper-gold-silver mine located in central Yukon, Canada.
Company information
Directors Francis Ralph McAllister (Non-Executive Director and Chairman)
David Charles Linsley (Director and Chief Executive Officer)
Guy Le Bel (Non-Executive Director)
Gati Al-Jebouri (Non-Executive Director)
Secretary London Registrars Ltd
Registered office Suite A, 6 Honduras Street
London EC1Y 0TH
Registered number 07352056 (England and Wales)
Auditor PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London E14 4HD
Bankers Bank of Scotland
St James's Gate
14-16 Cockspur Street
London SW1Y 5BL
Solicitors Cooley (UK) LLP
Dashwood
69 Old Broad Street
London EC2M 1QS
Joint Brokers SI Capital Limited
46 Bridge Street
Godalming, Surrey GU7 1HL
GMP Securities L.P
300-145 King St W
Toronto, ON M5H 1J8
Arden Partners
25 Old Broad Street
London EC2N 1AR
Registrars Link Asset Management
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Website www.pembridgeresources.com
TDIM PERE
This information is provided by RNS
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